Dragged down by automobile manufacturing, Germany’s industrial output fell 1.9% month-on-month in December, marking the first contraction since August last year.
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German industrial output declined for the first time since last August, and the sector has yet to emerge from its prolonged slump.
On February 6, according to the latest data released by the German Federal Statistical Office, manufacturing production fell by 1.9% month-on-month in December last year, far exceeding Bloomberg's survey expectation of a 0.3% dip. Previously, November's data was revised to a slight increase of 0.2%.
Looking at specific industries, the automotive manufacturing sector was the main factor dragging down overall output; after a strong rebound in November, its December output plummeted 8.9% month-on-month. The machinery manufacturing and equipment maintenance fields also performed weakly, reflecting that terminal demand in manufacturing remains under pressure overall. However, output in other transport equipment categories such as aircraft, ships, and military vehicles saw growth, partially offsetting the previous declines. Additionally, seasonal factory shutdowns during Christmas also had some impact on the industrial production data for the month.
It is noteworthy that export data for the same period showed unexpected resilience. December export value grew by 4.0% month-on-month, marking the largest increase since October 2021, with exports to the US rising by 8.9%. Although December 2024 was still down 12.9% year-on-year, the accelerated month-on-month rebound indicates that the actual impact of tariff shocks has eased significantly since mid-2023. Imports increased slightly by 1.4% in the same period, widening the trade surplus to 17.1 billion euros.
Economists regard this as a temporary fluctuation
Despite the disappointing data, most economists believe this is only a temporary setback. Carsten Brzeski, ING Global Head of Macro, stated in a client report that the output decline is just a "temporary interruption in the recovery process," not a new downward trend.
Economists expect fiscal stimulus measures announced by the German government last year will drive manufacturing growth in 2026, and factory orders have already started to rebound in the last four months of 2025. Brzeski said:
"It is only a matter of time before industrial output catches up with demand growth, and more and more signs show a bottom is being formed."
Bloomberg economist Martin Ademmer pointed out that the decline in December output highlights the continued difficulty in kickstarting an industrial recovery. Although some positive signs have appeared in recent months, sentiment in the sector remains weak, and a significant proportion of companies have seen their competitiveness decline.
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